Matt Weidner – Fighting For The American People

Posts Tagged ‘CAPACITY IS A CASE KILLER’

(I’ve been told to watch the case referred to in this blog, In Re: Wilson, a bankruptcy case filed in Louisiana…I don’t yet see the earth shattering impact of this case, but I’m told to stay tuned….it’s coming.  This morning I share just one little nugget from the case.)

One of the biggest issues I’ve been screaming about for years now is the fact that in so many foreclosure cases no one has any real idea who the Plaintiffs or the parties are in the litigation.  The technical legal point of dispute is “Failure of Capacity” which covers both the fact that these Plaintiff’s fail to plead or identify who they are i.e. Sand Canyon Corporation, a wholly owned subsidiary of the H and R Block Corporation.  Instead corporation, fictitious names or trusts are entered as parties in litigation with no identification whatsoever which would allow me to serve them as a counter defendant or to pursue them later when the wave of title claims start crashing down in the years to come.  The second component of the capacity challenge relates to the fact that in so many foreclosure cases, the straw plaintiff is acting in some vague and undefined representational capacity but that capacity is never, ever clearly defined.

I have won my “Failure of Capacity” argument virtually every time it is raised, but frankly it is not raised nearly enough, even by me.  The position that must be taken and that is supported by all relevant case law is that I cannot litigate against a party or a witness or any entity that has entered evidence into a case that is not properly identified.  i.e. XYZ Corporation, a Florida Corporation. (For more information on the entire subject, search this blog for the “Compendium of Capacity Cases”, which contains virtually all the cas law on the subject.)

One example of the practical application of the capacity argument is found below in a bankruptcy case pending in Louisiana, In Re: Wilson.  I’ve been directed to this case some time ago and I’m told that it will have an explosive outcome at some point in time in the future.  I admit that I’m a bit befuddled by the case right now because while I see problems with the case that are reflected in the Orders and pleadings, I don’t yet see the bombshells……but I am told they are coming.

For now, have a look at this stunning affidavit/admission.  This should be powerful evidence to anyone out there battling foreclosure cases against Sand Canyon which is apparently a zombie corporation with no right to proceed with litigation, much less the apparently active corporate activities we all find them engaged in….yet another example of why I say…..

CAPACITY IS A CASE KILLER

sandcanyon

And another nugget from the case

inrewilsontrustee

The vast majority of foreclosure cases are brought not by the real parties that have any interest in the outcome of the litigation, but by nominal, shell Plaintiffs that have been propped up by the investors or the real parties in interest to pursue the litigation.  Because the vast majority of foreclosures go undefended, this important point is missed in the vast majority of cases.  While it may be missed in cases, the consequences of this phenomena are profound and broad reaching.

The failure to identify what parties are really at risk in litigation prevents courts, policy makers, investors and the general public from knowing who stands to win or lose in litigation.  Concealing the identity of the real party in interest allows those who made bad decisions to shirk their responsibility in the litigation, a fact that is more important when their conduct could very well make them complicit in creating the situation that led to the litigation.  On a very practical level, litigation pursued by servicers probably prohibits effective settlement or mediation discussions because they lack the risk of loss that forces effective resolutions.  The consequences of this are played out hundreds of thousands of times a day as homeowners try futilely to negotiate a short sale or modification with the lender.  This is especially important now that circuits across the state are rolling out mediation programs.

FORECLOSURE MEDIATION IS NOT GOING TO WORK UNLESS THE REAL PARTIES IN INTEREST ARE IN THE COURTROOM

The fact that mediations are not going to work until we have real players at the table will be borne out in the months to come.  Certainly borrowers will share some of the blame for not actively participating in the mediation and settlement discussions, but at the end of the day, another bank owned property is a loss for all parties involved….there are too many of these properties already.

The key to addressing this problem is to first attack the Plaintiff’s capacity.  The first part of the attack is the fact that most Plaintiffs are never properly identified in the lawsuit.  Courts must begin to demand knowing just exactly where this company comes from that is bringing this action.  Courts must begin to ask, “Who am I about to grant this $250,000 judgment to?”  then not let the case proceed until they have a very clear answer to that question.

Our State Division of Corporations or Department of Financial Services must begin to demand registration of all these nominal and real plaintiffs.  Specific laws are already on the books that demand registration of foreign corporations and of all trusts, but these registration requirements are being totally ignored.

OUR STATE IS IGNORING MILLIONS OF DOLLARS IN TAX REVENUE AND FAILING TO PROVIDE APPROPRIATE REGULATORY OVERSIGHT BY IGNORING THESE LAWS.

Once the nominal plaintiff is properly identified, it’s time to demand proof that they have the authority to maintain the litigation on behalf of the real party in interest.  This too is addressed by the capacity argument, but you must also be thinking about this in the context of preparing discovery, because the proof demanded will come in the form of the Plaintiffs responses to the discovery requests.

I have previously attached my capacity Motion to Dismiss and I can tell you that when the facts support this Motion, it is nearly impossible for the Plaintiffs to wiggle their way around.  Even the most bank-friendly judge will have problems denying this Motion and if the motion is denied, it sets up a very significant summary judgment or appeal issue. I’m going to work on this motion again to put some more recent circuit court cases into it, but as I’ve stated before…

CAPACITY IS A CASE KILLER!

Keep up the good fight!